CoinTerra’s entry level machine, the TerraMiner II, will sell for $3,499. While that may seem like a high price to most people, the machine will also break the important $3 per Gigahash barrier, which has been the current goal for many companies in terms of achieving cost effectiveness. The machine is set to be launched in January of 2014.

For those of you unfamiliar with Bitcoin mining, we’ll give you a quick and simplified recap. Bitcoin mining refers to the production of new Bitcoins through the solving of complex algorithms, hence why Bitcoin is sometimes called a cyrpto-currency. Satoshi Nakamoto designed the Bitcoin system so that the flow of new coins into the market would eventually slow as batches of Bitcoins would be cut in half every four years.

At the same time, Nakamoto also made it so that Bitcoin mining would become more difficult. Originally, Bitcoins could be mined with a simple home PC, now advanced mining rigs are required to create new batches of coins. This would regulate the supply of Bitcoins and help to preserve value. These rigs can costs tens of thousands of dollars and consume huge amounts of electricity.

Some critics now feel that Bitcoin mining is becoming too expensive and will eventually undermine the market. Beyond the cost of equipment, the costs of electricity are now also becoming detrimental to Bitcoin production. Indeed as costs rise, it’s possible that Bitcoin mining could become so expensive that mining operations could all together cease. What this would mean for the larger Bitcoin community is hard to predict.

If CoinTerra delivers on its promise, they could revolutionize the Bitcoin mining rig market, which has increasingly becoming dominated by expensive rigs well outside of the hands of regular people. This could help to break the stranglehold that some Bitcoin mining outfits are slowly beginning to build over Bitcoin production.

Still, the Bitcoin system is designed so that one batch will be delivered every ten minutes, regardless of developments in hardware and other factors. Even if a company makes a major breakthrough that brings mining costs and times down, the system will self adjust and wipe out this advantage.

While this will discourage some potential miners from mining, it won’t threaten the stability of the system. Indeed Nakamoto designed the systems specifically so that mining would taper off and prices would rise over time. He designed the system this way to counteract the deflationary tendencies of central banks overprinting traditional money. So in the long run, the increasing costs and slowing supply of Bitcoins should be viewed as a positive development for traders and investors. For now, CoinTerra’s machines could shift the Bitcoin mining rig away from mass power and towards efficiency, a development that could strengthen Bitcoin as a whole by lowering mining costs and increasing participation.